The Narendra Modi government’s first full-year Budget turned out to be a volatile affair for stocks with the Sensex swinging 700 points, but promise of lower corporate taxes and deferral of GAAR helped the benchmark finally end 141.38 points up — the first rise on a Budget day in 4 years.
The Nifty rose 57 points to finish above the 8,900-level.
Shares of Banking, Healthcare and Auto sectors shot up on good buying while FMCG, Consumer Durable and Power counters fell on selling pressure. Scrips of cigarette makers, led by ITC, declined on a proposal to hike excise duty on cigarettes.
While participants today said they were initially disappointed on lack of big-bang reforms in Budget, sentiments were lifted after Finance Minister Arun Jaitley’s announcement of cut in corporate tax by 5 per cent to 25 per cent over four years starting April 2016.
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Besides, the proposal to defer applicability of General Anti-Avoidance Act (GAAR) by two years also boosted buying, they said, while adding the government’s projections on growth and commitment on fiscal discipline front supported sentiment.
The BSE Sensex resumed higher at 29,411.33 and hovered in a wide range of 28,882.02 and 29,560.32. A recovery in the last two hours helped the Sensex end at 29,361.50, logging a gain of 141.38 points or 0.48 per cent.
In the previous three sessions on Budget 2014, 2013 and 2012, the Sensex had ended with loss.
The NSE Nifty also moved up by 57.25 points to close at 8,901.85, after hovering between 8,751.35 and 8,941.10.
“Given the constraints of the fiscal space, it is a well balanced and well thought through budget. It will unleash India’s growth potential in the coming years and make it a preferred investment destination. Rationalisation of corporate taxes, deferment of GAAR rules and ease of doing business will in general improve confidence,” said Shachindra Nath, Group CEO, Religare Enterprises.
Among Sensex constituents, Axis Bank topped the gainers by surging 8.1 per cent. Government’s initiative to bring in a Comprehensive Bankruptcy code for the ease of doing business by 2015-16 is a big welcome step from the banking sector perspective, said S Ravi, practicing chartered accountant.
Other major Sensex gainers were Tata Motors, ICICI Bank, Dr Reddy, Hindustan Unilever, Cipla, GAIL, Tata Steel, HDFC Bank, Infosys, RIL and M&M. They gained between 1-3 per cent.
As many as 22 scrips out of the 30-share Sensex pack ended higher while eight declined.
“I would rate the budget a 7 and a half on a scale of 10! Though it is a fairly well balanced budget, market expectations were really sky rocketing before this day…It is not close to the ‘Visionary Document’ that people have been talking about,” said Nitin Jain, CEO â€“ Retail Capital Markets & Global Asset Management, Edelweiss.
Major gainers include Axis Bank (8.1 per cent), Tata Motors (3.15 per cent), Sun Pharma (3.62 per cent), ICICI Bank (3.15 per cent), HUL (2.50 per cent), Dr Reddy (2.60 per cent), Cipla (1.84 per cent) and M&M (1.02 per cent).
However, ITC dropped by 8.27 per cent, followed by BHEL 3.21 per cent, NTPC 1.64 per cent, Hindalco 1.29 per cent and Tata Power 0.40 per cent.
Among the S&P BSE sectoral indices, Bankex rose by 3.27 per cent, followed by Healthcare 2.03 per cent and Auto 1.08 per cent while FMCG fell by 4.09 per cent, Consumer Durable 2.05 per cent and Power 1.15 per cent.
“A good long term Budget…with a clear vision for next 5 years. On the positive side the corporate tax reduction, clarity on FDI+FII investment in private banks, reduction of leakages & subsidies…on the negative side, the lack of proactive measures to give some visibility on how growth will be revived, cutting fiscal deficit & no increase in plan expenditure,” said Dilip Bhat, Joint Managing Director, Prabhudas Lilladher.
The total market breadth turned negative as 1,498 stocks ended in red, 1,230 finished in green while 141 ruled steady.
This is probably the first time in many years that the Union Budget was presented on a Saturday. The stock markets are generally closed on Saturdays and Sundays, except for special circumstances.
Market Outlook Vinod Nair, Head – Fundamental Research, Geojit BNP Paribas
It is a well balanced act, as it intends to improve economy’s growth in the long-term. The first full budget provides healthy direction to the economy. The focus is to grow with emphasis on Financing, Manufacturing and Infra. Intent is to dramatically improve the economy with long-term target of 3% fiscal deficit, increase savings and double-digit GDP growth. GST which is likely to be ready next year is positive, and government has taken the right action like increasing tax share and responsibilities to states. But in the near-term, tax rate is likely to increase for corporate while changes in individual’s tax is below expectation. Reduction in corporate tax in the long-term will be healthy for valuation.
This is a good start as government has clearly laid out the roadmap for taking the ‘make in India’ initiative to Defense sector. Another major positive is government’s plans for 5 UMPPs on plug and play mode. This is an indication of things to come over the long term in projects space in India. This would be extended to other infrastructure projects in roads, rail, airports and ports. That said, much more details will be required to know how ‘make in India’ for other manufactured products becomes a reality. As land acquisition and labour acts as key impediments for growth in this space.
We have seen high volatility today and as market understands the details, we believe this will bring fair momentum in the market. In the short term, we can see consolidation till the impact from Realty (would DDT will applicable or not for REIT, no change in individual tax exemption) and Infra (how to move out of stuck projects) is clearly understood since expectation was very high. Important acts like labor and land has to be handled later.
Market Wrap Up by Alex Mathews, Head – Research, Geojit BNP Paribas
On Saturday the markets remained open for normal trading on the back of Union Budget. The major highlight in the Union budget was that the current account deficit for FY15 to be below 1.3% of GDP and GDP is set to show double digit growth in the coming days. The GST is planned to place by April 1, 2016 and the ease of doing business will be improved further. Finance minister in his budget speech announced a reduction of corporate tax from 30% to 25% for over next 4 years. The union budget is likely to revive the growth momentum in the economy, for that necessary emphasis has given to the infrastructure development, agriculture and rural economy.
Nifty today closed at 8901 up around 57 points. The market breadth changed to negative from positive as there were seen 1234 stocks advancing against 1496 stocks declining. The Nifty volatility index, India VIX stood at 16.9700 down around 13.28%.
The Mid-cap and small – cap ended lower, closed down 0.01% and0.47% respectively.
The major sectorial gainers for the day were Banking and Healthcare which closed up around 3.27% and 2.03% respectively. On the other end the losers were FMCG and Consumer Durables, ended down around 4.09% and 2.05% respectively.
In the stocks’ front, buying was seen in Axis Bank and IndusInd bank, closed up around 8.98% and 6.21% respectively and on the other end the sellers were ITC and BHEL which closed up around 8.23% and 3.03% respectively.
The FIIs were net buyers in the capital market segment, bought shares worth Rs 1957.1 crore on Friday, 27 February 2015. On the other hand the DIIs were net sellers on 27 February 2014, sold shares worth Rs 491.93 crore as per the provisional data from the stock exchanges.
HSBC Manufacturing PMI and current account are the major triggers for domestic markets on Monday.